Correlation Between Allianzgi Technology and Allianzgi Nfj
Can any of the company-specific risk be diversified away by investing in both Allianzgi Technology and Allianzgi Nfj at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Allianzgi Technology and Allianzgi Nfj into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Allianzgi Technology Fund and Allianzgi Nfj Mid Cap, you can compare the effects of market volatilities on Allianzgi Technology and Allianzgi Nfj and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Allianzgi Technology with a short position of Allianzgi Nfj. Check out your portfolio center. Please also check ongoing floating volatility patterns of Allianzgi Technology and Allianzgi Nfj.
Diversification Opportunities for Allianzgi Technology and Allianzgi Nfj
-0.05 | Correlation Coefficient |
Good diversification
The 3 months correlation between Allianzgi and Allianzgi is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding Allianzgi Technology Fund and Allianzgi Nfj Mid Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Allianzgi Nfj Mid and Allianzgi Technology is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Allianzgi Technology Fund are associated (or correlated) with Allianzgi Nfj. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Allianzgi Nfj Mid has no effect on the direction of Allianzgi Technology i.e., Allianzgi Technology and Allianzgi Nfj go up and down completely randomly.
Pair Corralation between Allianzgi Technology and Allianzgi Nfj
Assuming the 90 days horizon Allianzgi Technology Fund is expected to under-perform the Allianzgi Nfj. In addition to that, Allianzgi Technology is 2.18 times more volatile than Allianzgi Nfj Mid Cap. It trades about -0.1 of its total potential returns per unit of risk. Allianzgi Nfj Mid Cap is currently generating about -0.21 per unit of volatility. If you would invest 2,650 in Allianzgi Nfj Mid Cap on November 27, 2024 and sell it today you would lose (67.00) from holding Allianzgi Nfj Mid Cap or give up 2.53% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Allianzgi Technology Fund vs. Allianzgi Nfj Mid Cap
Performance |
| Timeline |
| Allianzgi Technology |
| Allianzgi Nfj Mid |
Allianzgi Technology and Allianzgi Nfj Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Allianzgi Technology and Allianzgi Nfj
The main advantage of trading using opposite Allianzgi Technology and Allianzgi Nfj positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Allianzgi Technology position performs unexpectedly, Allianzgi Nfj can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Allianzgi Nfj will offset losses from the drop in Allianzgi Nfj's long position.The idea behind Allianzgi Technology Fund and Allianzgi Nfj Mid Cap pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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